Incorporating a business in British Columbia (BC) involves creating a separate entity to carry on your business. Like in most Canadian provinces, a fully incorporated company in BC enjoys all the rights of a natural person. The company is also separate from its shareholders.
It’s important to speak with your accountant and lawyer, but you will probably want to incorporate your business in Canada for various reasons, such as a limited responsibility and a low tax burden. However, many people are excited about incorporating in BC for one key reason — it doesn’t require a minimum Canadian Citizenship or permanent residency status for 25% of the board of directors.
Steps to incorporate a company in BC
Companies are incorporated in BC under the British Columbia Business Corporations Act. Incorporating is not a must, but it has advantages that suit most businesses in the long run. For instance, an incorporated company is legally allowed to enter into contracts and incur debts, independent of the owner.
To incorporate in BC, you will need the following:
- A corporate name (unless it’s a numbered corporation)
- A registered physical office address and mailing address in BC
- The list of directors and their addresses. (Minimum 18 years of age, no bankruptcy or criminal charges)
- The share structure (shareholders can be either an individual or a legal entity)
The incorporation process will involve a 3-key step process as outlined below.
1. Name check and reservation
You are required to submit three names to the BC OneStop Business Registry for approval. Your business name must have three distinctive, descriptive and legal elements (ie: LTD, INC) to gain name approval from the province.
Remember that the BC government must approve all corporate names before the incorporation is filed. This may take approximately 10 to 15 business days. However, the corporate registry still allows you to apply for expedited name checks and reservation services for an additional fee.
Business name approval in BC lasts for 56 days, within which the incorporation should be completed. If you do not complete the process within that timeframe, you’ll have to start again. You can apply for the company’s name through:
Submit your approval request to the BC Registries and Online Services for a Business Name check and approval.
Service BC Centre
You can visit a local Service BC Centre with the name approval request form. They’ll submit your request to the Name Reservation Unit for examination at the Corporate Registry.
Obtaining a preliminary NUANS Search
This is an optional secondary search request that analyses potential conflicts with your proposed name. It’s an important step, considering the primary name search and reservation process skips many areas of information, such as any existing federal corporations with close or similar business names.
You’re allowed to use English, French, or both languages in the name of a corporation in BC and Canada at large.
2. Complete the Incorporation Agreement
Before you can incorporate a company, you’ll need an incorporation agreement signed by each incorporator. These incorporators will also be the company’s shareholders and directors once the company is fully incorporated.
The key requirement is a minimum of one incorporator holding one share. The BC Business Corporations Act also specifies that the incorporation agreement must contain the signature of each incorporator, full name, and the date of signing. It should also state clearly the number of shares taken by each incorporator.
An incorporation agreement is part of the business documents and must be kept with other company records.
3. Prepare and file the Articles of Association
Every company must have articles of association outlining the rules that govern the conduct of its shareholders, director and other officers. Upon fulfilling this requirement, you’ll now be eligible to file an Incorporation application, either by yourself or with the help of a lawyer.
The BC government allows you to file your incorporation documents through the Corporate Online portal. Here, you’ll find all the information to assist you with completing the online application form. There are also other online services being offered.
Why you need a lawyer to incorporate in BC
Even though do-it-yourself options are available online, a lawyer can help you avoid making costly mistakes in your incorporation and in setting up your corporate structure. The BC Provincial Government has no legal right to compel you to hire a lawyer to incorporate your company. You can incorporate without a lawyer; it is your decision.
Hiring a lawyer means your company’s tax and legal interests were not only factored into the incorporation decisions, but your lawyer is there to protect your interests in the future — something you won’t achieve when doing it alone. Other benefits of hiring a lawyer include:
1. Essential legal advice
Your lawyer can advise you on incorporating your company, evaluate your business plan and then outline a structure to align with your goals. If you plan on inviting investors onboard, you need to establish the right type of share structure for your business.
Hiring a corporate lawyer can help you navigate these issues and avoid future conflicts between stakeholders and investor challenges. They can help you chart a course that’s best for your company and its shareholders.
2. Preparation of documents
Name reservations, creating important company documents, and filing them in the relevant registry are important tasks that require meticulous attention to detail; no mistakes. The experience of a lawyer will ensure that your documents and important paperwork are all in order. Their legal knowledge is an important assurance that everything is done correctly and according to the Government of BC requirements.
3. Ongoing assistance as your business grows
Your new company will require maintenance after it has been incorporated. For instance, the BC government requires you to file annual reports, handle any arising technicality and keep the company in overall good standing. Your lawyer will help you handle these situations with ease whenever they arise. Your legal team can also help you position your company for a sale, and then pass over the ownership to the new owners.
How incorporating in BC is different from other jurisdictions
Canada has strict regulations on incorporating companies not owned by Canadian Citizens. All Provinces and jurisdictions, including the Federal Incorporations, require at least a minimum Canadian Citizenship or permanent residency status for 25% of the board of directors.
British Columbia is the only jurisdiction where these laws are not strictly applied. As such, it’s an attractive hub for foreign individuals who wish to start or buy an existing business within Canada.
BC also allows you to start alternative business structures if you feel incorporation doesn’t suit your business needs. You can opt for business structures like partnerships, sole proprietorships, limited partnerships, limited liability partnerships, or joint ventures.
What are the advantages of incorporating your company?
Some of the advantages of incorporating a company include:
An incorporated company is distinct from its owners. The liability of the owners and shareholders is only limited to their contributions to share purchase.
Numerous tax benefits
Incorporating a company in BC lets you enjoy tax benefits like lower tax rates, preferential income tax treatment, lifetime capital gains exemption, income splitting, etc. It can help you minimize your tax burden and maximize your after-tax income.
Easy access to capital and transfer of ownership
Incorporating a company gives room for more shareholders on board. This allows the company to raise capital from investors easily. You can also easily transfer the company ownership by selling the shares.
The BC government allows you to incorporate a numbered corporation. Your incorporation number will be provided by the Province of British Columbia, with the legal element of your choice. Examples of the legal element options you can use include: Limited, Ltd., Incorporated, Incorporate, Corp., Corporation or Corp.
You don’t need name approval and reservation if you decide to use the incorporation number as the company’s name.
What does it cost to incorporate a company in British Columbia?
The cost of incorporating a company in BC is $350, plus the name approval fee of $30. This covers all the processes until the company is incorporated and you’re assigned an incorporation number. Legal fees will be set by your legal firm if you hire one.
Is it necessary to renew the incorporation over time?
An incorporated company does not need to be renewed or refiled. There are only one-time payments for incorporations, and the corporation will exist for as long as you want it.
What are the types of incorporated companies in BC?
British Columbia allows you to incorporate a company under provincial and federal legislation. Companies incorporated under BC legislation are known as British Columbia companies, while those under federal legislation are federal corporations.
Incorporating locally with the provincial BC government is cheaper and involves less paperwork. However, you’ll need to register your corporation in other jurisdictions if you decide to expand your operations.
BC has one of the easiest incorporation services in Canada. By following their simple steps to incorporate, you shield yourself against any personal liability for the company alongside other important benefits. It’s recommended that you incorporate your company with the help of a lawyer. Your lawyer(s) will not only help set up the documents correctly the first time – to align with your business vision – but will be a constant figure throughout the life of your company to ensure it remains in good standing and that your interests are protected.
Amir Ghorbani, the business lawyer at Pax Law, can help you with all your incorporation and business law needs.